The bank of mum and dad funded £9.4bn worth of property purchases in 2023, research from Savills has found.
This represents a twofold increase since 2019 which, the estate agency said, indicates a more stringent mortgage market and higher mortgage rates.
The report found a total of 164,000 first-time buyers had family assistance in 2023, which represents 57 per cent of all mortgaged first-time buyers receiving help.
While Savills acknowledged the number of assisted buyers fell from its peak of 198,000 recorded in 2021, it pointed out this was the highest proportion of first-time buyers receiving help since 2012, and is 10 per cent up on 2022.
Savills director of residential research, Frances McDonald, said: “While many homebuyers enjoyed record low interest rates during the early part of the decade, more stringent mortgage requirements have impacted higher LTV lending, most commonly used by FTBs.
“In addition to this, record rental growth and increased mortgage rates have acted as a further blow to first-time buyers’ home-owning aspirations.
“As a result, a greater proportion have needed support to get onto the housing ladder, and those who were able to, took advantage of family support to try and secure a deal at a lower mortgage rate.”
Prediction
Savills looked to the future and pointed out average quoted mortgage rates for 90 per cent and 95 per cent LTV rates were 5.66 per cent and 6.08 per cent in July 2024 respectively.
Although these rates have come down from their respective peaks, they have increased significantly in the last two years.
As mortgage rates continue to fall, Savills forecasted that a smaller proportion of first-time buyers are likely to need support from the bank of mum and dad.
While the actual number of those supported is expected to remain on par with 2023, the proportion of first-time buyer purchases receiving support will decrease from 57 per cent in 2023 to 54 per cent in 2024.
The total contribution towards first-time buyer purchases will remain in line with 2023 levels while a total of almost £30bn is expected to be paid out over the next three years.
“Despite the Bank of England’s recent decision to cut the base rate, we expect that lenders will continue to favour less risky, lower LTV mortgage lending,” McDonald added.
“This means that buyers will still have a hard time getting their first foot on the housing ladder.
“Those who have the option of family support and are secure in their employment will find it much easier to get onto the housing ladder and only the highest earners and those who have received significant support are likely to be able to buy at the top end of the market.”
tom.dunstan@ft.com
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